The interaction of heparan sulfate with protein ligands depends on unique oligosaccharide sequences containing iduronic acid (IdUA), N-sulfated glucosamine residues, and O-sulfated sugars, To study the role of O-sulfation in greater detail, we isolated a Chinese hamster ovary cell mutant defective in 2-O-sulfation of iduronic acid, The mutant, pgsF-17, was identified by a colony blotting assay in which colonies of mutagen-treated cells were replica plated to two disks of polyester cloth, One disk was blotted with I-125-labeled basic fibroblast growth factor (bFGF) to measure binding to cell surface proteoglycans. The other disk was incubated with (SO4)-S-35, to measure proteoglycan biosynthesis. Autoradiography revealed a colony that did not bind I-125-bFGF, but incorporated (SO4)-S-35, normally (mutant pgsF-17), Complete deaminative cleavage of heparan sulfate revealed that material from pgsF-17 lacked IdUA(2OSO(3))-GlcNSO(3) and IdUA(2OSO(3))-GlcNSO(3)(6OSO(3)), but contained a higher proportion of glucuronic acid GlcUA-GlcNSO(3)(6OSO(3)) and IdUA-GlcNSO(3)(6OSO(3)). Assay of the 2-O-sulfotransferase that acts on IdUA residues showed that mutant 17 lacked enzyme activity, Interestingly, the alteration resulted in accumulation of Glc NSO3 groups, suggesting that under normal conditions 2-O-sulfation decreases GlcNAc N-deacetylation/N-sulfation, and that the reactions occur simultaneously, The formation of IdUA and 6-O-sulfated glucosaminyl residues appears to be independent of a O-sulfation. pgsF-17 also lacks 2-O-sulfated GlcUA residues, suggesting that the same enzyme is responsible for 2-O-sulfation of IdUA and GlcUA residues, Mutant 17 provides a useful tool for studying the regulation of heparan sulfate biosynthesis and the relationship of heparan sulfate fine structure to its biological function.